The Daily Market Report: Gold Range-Bound Ahead of Weekend

USAGOLD/Peter Grant/10-27-17

Gold appears poised to end the week on a consolidative note, well within the range that has dominated so far in October. That range is defined by the 1260.10 low from 06-Oct and the 1306.04 high that was set 10-days later.

Dollar gains and risk appetite continue to limit the upside for gold. Additional optimism about the U.S. economy was garnered from today’s better than expected 3.0% advance GDP print. That lends an additional measure of confidence to expectations that the Fed will indeed raise rates again in December.

The Catalan parliament votes to declare independence from Spain today. Spanish PM Rajoy quickly moved to invoke Article 155, dissolving the Catalan parliament, moving to fire Carles Puigdemont and his cabinet and calling for a regional election.

Tensions are high and there are risks for unrest over the weekend. Headlines following the initial independence referendum several weeks ago suggested Spain was on the verge of a civil war. That is probably even more true today.

Will Spain send in the national police and army troops to enforce direct rule? How will the people of Catalonia react?

Now that the budget has passed both the House and Senate, the GOP is obliged to release the specifics of their tax proposal. That should come next week and that will allow analysts to calculate the debt implications and I suspect they will be significant.

With the national debt and household debt at record levels, it’s reasonable to wonder just how much more debt this economy can tolerate. That in turn begs the question, why would the Fed raise rates into this situation; especially when inflation remains so subdued.

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